Frugal Investing

Conservative Investing – The 10% Rule

You’ll find this to be an excellent frugal investing technique. When you get your next paycheck, don’t do what most people living paycheck to paycheck do; which is spend the money and pay their bills right off the bat leaving no money available for investing.

Instead, beginning with your next paycheck, take 10% of your net pay right off the top and invest it. You’ll want to do this with every paycheck you receive.

Using the frugal investing 10% rule, you’ll be paying yourself first by writing your first check to your investment vehicle (please see below) before you pay your mortgage, rent, groceries, etc.

If funds are tight you may be thinking, oh come on, I’m already spending more than I earn, or barely breaking even. Believe us when we say, you will be able to build your wealth using the 10% rule and still get your expenses paid. By budgeting money properly, you’ll find you can eliminate unnecessary expenses providing you with that 10% investment money.

Frugal Investing – How To Invest Your Money

Your risk adversity, whether it be conservative or more aggressive impacts how you invest your money. We like frugal investing; so we lean more towards the conservative side looking for maximum returns and low expense investment vehicles. You’ll also find our tips on saving money also compliment these frugal investing tips.

Below, you’ll find our investment strategies.

Basically, a CD is a time deposit, which means the money you put into a CD should remain there for a specific amount of time before you can withdraw it. A CD’s maturity can range from days to 3 months, 6 months, 1 year, or even up to 5 years.

We believe CD’s are an excellent frugal investing vehicle because you can earn a decent interest rate, they’re usually FDIC insured (verify FDIC insurance with your bank) and you can choose how long to park your money in the CD whether it be 3 months, 6 months, 1 year, etc.

We prefer the shorter terms CD’s because it enables us access to our funds quicker than a longer term CD. Also, you’ll find that in many cases, the interest rate earned is not substantially higher on a long versus short term CD.

Another GREAT benefit of the CD is it’s a liquid investment. If you ran into a situation where you had to withdraw your money prior to the CD’s maturity, you would lose some or all the interest you would have earned on it had you held onto it until maturity. The “good news” is, you’ll recover the money (the principal) you invested into the CD.

You usually can find the best CD rates on-line. We use bankrate.com which is an excellent resource. While on this site, you’ll want to make sure that the CD is FDIC insured and that the bank has a good reputation.

On Bankrate.com you can actually sort by the financial condition of the institution providing the CD’s – a great tool. The site also has other excellent features that you can sort by to meet your needs. This includes the CD minimum deposit and rate of return (APY).

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